Texas recently made a major change to the way non-compete agreements work for healthcare providers. On June 20, 2025, Governor Greg Abbott signed Senate Bill 1318 (SB 1318) into law, creating new rules that reshape the requirements for Texas physician non-compete agreements and extend restrictions on non-competes to additional healthcare providers.
The new law took effect September 1, 2025, and applies to any new or renewed non-compete agreement entered on or after that date. These rules are designed to give healthcare professionals more freedom, patients better access to care, and employers a clearer legal framework. Griffith Barbee has been helping Texas businesses and professionals navigate complex employment and intellectual property agreements for years. Here, we break down the changes, tell you why they matter, and how we can help you adapt.
What SB 1318 Changes about Non-Compete Agreements in Texas
Expanded Coverage
SB 1318 expands non-compete restrictions to additional healthcare professionals. It now applies not only to physicians but also to dentists, professional and vocational nurses, and physician assistants.
Plain Language Requirement
The terms and conditions must be in writing and drafted “clearly and conspicuously,” which should serve to eliminate dense legal jargon buried in contracts.
Geographic Limits
Non-competes are limited to a five-mile radius from the provider’s primary practice location. Large, sweeping territorial restrictions will no longer be enforceable.
One-Year Duration
Employers are permitted to restrict competition only for a one-year period following a provider’s termination. Accordingly, multi-year non-compete agreements executed on or after the effective date of SB 1318 will not be enforceable under Texas law.
Buyout Cap
Healthcare providers must be able to buy out their non-compete. SB 1318 caps the buyout amount at no more than one year’s salary or wages at the time of departure.
Extra Protection for Physicians
The termination of a physician without “good cause” renders a non-compete unenforceable. This provision defines “good cause” as a reasonable basis for termination related to the physician’s conduct, job performance, and contract or employment record. For physicians, this reduces the risk of being sidelined unfairly.
Safeguards for Patients
The law maintains important existing requirements that protect patient rights. Physicians can still access patient lists and medical records (for a reasonable fee) and continue treating patients with acute conditions, even after leaving a practice.
Why This Law Matters
For Healthcare Employers
Employers will need to rewrite contracts to comply with SB 1318 for future agreements. Non-compete agreements entered on or after September 1, 2025, that are too broad, too long, or missing a buyout clause will no longer be enforceable. While contracts entered before September 1 remain subject to the previous rules, failure to update contracts could leave businesses without protection and open to disputes.
For Physicians, Nurses, and Dentists
The law gives providers greater mobility. With shorter restrictions, smaller geographic limits, and capped buyouts, professionals can change jobs or open new practices with less risk of being sued.
For Patients
Patients stand to benefit through better continuity of care. Providers can stay in their communities and continue seeing patients, giving patient’s greater access to treatment and the providers of their choice.
Practical Next Steps for Employers and Providers
- Review contracts now: Employers should review their standard non-compete template to ensure all future agreements comply with the new law. Additionally, employers should take note of physician employment agreements that renew automatically and prepare as needed a new agreement in compliance.
- Understand your rights: Providers should review agreements carefully before signing or renewing.
- Consider alternatives: Employers can still use tools like non-disclosure and trade secret protections to safeguard sensitive information.
Final Thoughts
SB 1318 represents a significant shift in Texas non-compete law. By limiting duration, scope, and cost, the law shifts the balance in favor of healthcare providers and patients—prompting employers to rethink their approach.
How Griffith Barbee Can Help
Whether you’re a healthcare business worried about protecting your practice or a provider evaluating a new opportunity, the attorneys at Griffith Barbee are here to help you navigate the changes.
We regularly assist healthcare employers and professionals with:
- Auditing and rewriting contracts to ensure compliance with Texas law.
- Advising on enforcement strategies for existing non-compete agreements.
- Developing alternative protections, such as non-solicitation, confidentiality, and trade secret agreements.
- Representing clients in disputes and litigation when non-compete challenges arise.
As always, our goal is to safeguard your business while keeping you competitive in a rapidly changing legal environment.